BASF Report 2021 Management’s Report – Our Steering Concept 43 1 Calculation of Accelerator sales – Capital expenditures (capex) are used to manage capital employed in the BASF Group. These comprise additions to Accelerator sales refer to sales generated by the BASF Group from property, plant and equipment excluding additions from acquisi- products in our strategic portfolio to third parties in the business tions, IT investments, restoration obligations and right-of-use year concerned. Accelerator products make a substantial sustain- assets arising from leases. Capex is not just relevant to ROCE ability contribution in the value chain. In line with our corporate management, but also supports our long-term goal of increasing strategy, we set ourselves the global target of achieving €22 billion our dividend each year based on a strong free cash flow. in Accelerator sales by 2025. This target was already achieved in 2021. Consequently, we will adjust our portfolio steering target over Furthermore, we comment on and forecast sales at Group and the course of 2022. segment level in our financial reporting as a significant driver for EBIT For more information on sustainability-oriented portfolio management, see page 141 onward before special items and thus ROCE. For more information on the development of these indicators, see Results of Operations from page 56 onward Value-based management throughout the company An important part of our value management is the target agreement process, which aligns individual employee targets with BASF’s targets. The most important financial performance indicator in the operating units is ROCE. The other units’ contribution to value is also assessed according to effectiveness and efficiency on the basis of quality and cost targets. To assess this, we use metrics such as BASF’s internal service score in the service units. In addition to ROCE as the BASF Group’s most important financial key performance indicator, we use EBIT before special items and capex (capital expenditure) as key performance indicators that have a direct impact on ROCE and as such, support its management. – EBIT before special items is used to steer profitability at Group and segment level. This is calculated by adjusting the EBIT reported in the Consolidated Financial Statements for special items, making it especially suitable for assessing economic develop ment over time. Special items arise from the integration of acquired businesses, from restructuring measures, certain impairments, gains or losses resulting from divestitures and sales of shareholdings, and other expenses and income that arise out- side of ordinary business activities. 1 The definition of the relevant portfolio and further information can be found in the Sustainable Solution Steering manual at basf.com/en/sustainable-solution-steering